Are you still bullish on Bank Nifty and PSU Banks? Is it time to be against the crowd?

In today’s trading session we have seen sharp reversal from the higher levels. 

Bank Nifty formed very strong negative divergence with Nifty as Nifty touched new highs near 8996 but Bank Nifty formed lower highs and lower lows. This is a precursor for trend reversal. Many traders see divergence on indicators but at times divergence on different indices are also crucial and provide vital information!

So is this the time to create fresh long positions or to Book your profits and stay out?

Below is a part of the research on Bank Nifty published today in our daily research report “The Financial Waves short term update”

Bank Nifty Daily chart:

Wave Analysis:

Bank Nifty is one of indices which have been leading the market since October 2014. Post the rate cut by RBI on 15^th January 2015, Bank Nifty continued the up move and touched the high of 20910 levels on 28^th January 2015. However on the same day some nervousness was seen at 20910 and prices lost the gain of entire day and closed on the negative note. This suggests us to take cautious stand as prices have been trading near the important resistance area which is explained below.

As shown in daily chart, since February 2014 prices have been moving in impulsive run. As per this wave structure, intermediate wave …. completed at ……… in the month of October 2014 and since then intermediate wave ??? is ongoing which is extended. We have shown big upward moving channel which is connecting the earlier high of 12000 and 16000 made in the month of December 2013 and June 2014. Within this, prices are intact in small red upward moving channel. The high made of 20910 on28^th January 2015 is exactly near the resistance of both this channel. Intersection of 2 channels provide the important resistance, hence one should be cautious now. As per candlestick technique prices have formed Doji candle which suggests stop in the current rally at least for short term. From medium term perspective, move below …… will suggest that medium term downside correction has started.

In addition to above we have also shown short term chart which helps in timing the market. Bank Nifty has given a sharp reversal on downside and it is not the time to create fresh long positions.So what should be trading strategy from here? To know subscribe to the daily research report“The Financial Waves short term update”. Visit the Pricing page on www.wavesstrategy.com for subscription options and see it yourself why we are at very important juncture!

Elliott Wave Video on Why Nifty is at Crucial Juncture now!

Elliott Wave Video on Why Nifty is at Crucial Juncture now!







This video update is a part of Elliott wave news channel published every week by Ashish Kyal, CMT Director of Waves Strategy Advisors. We provide insights on freely traded markets – Global Equity, Commodity and Forex and focuses on discussion and interviews on methods using Elliott wave and advanced technical analysis concepts.

Nifty: On inverted scale: A different perspective to look at the trend!

Nifty has continued to move higher into uncharted territory. Everyone has started guessing the upside targets probably not on basis of any rationale but mere convictions. If conviction worked that well then why do most end up buying near the top and selling exactly at the wrong time.

Convictions are random and create false hopes at times. It is no different than a Gambler’s fallacy.During euphoric times it is prudent to look at the price movements by applying not only advanced concepts but also basic concepts of technical analysis.

Below is chart of Nifty but with a different perspective. An inverted chart! This chart was shown in our research report “The Financial Waves short term update” few days back on www.wavesstrategy.com.

Nifty daily chart – inverted scale

Wave Analysis:

In previous update we mentioned that, “In short, continue to use reactive method with trend following system i.e. to stay positive unless we see close below 5 days moving average Also stay alert and not complacent like majority because many things are going to align together over next few days”

Nifty inverted scale:We have certain perceptions when looking at an index or a stock during a downtrend compared to the uptrend. We tend to look at a specific pattern when the index has moved sharply lower but majority continue to maintain the strong bullish stand when the same index moves sharply higher. This thought process evolves from the basic assumption that there is a limit to the down move but the up move can continue towards unprecedented levels. Majority of the investors are conditioned to think in this way. Isn’t it a paradox!  Now look at Nifty daily chart shown above in inverted format. Following are a few observations:

(Please note the below reading is based on inverted scale so a positive divergence will actually indicate negative divergence on non-inverted scale. Also observe the scale on the chart which has increasing values down the chart)

The entire move has been in corrective fashion rather than impulsive which is very well within the black downward sloping channel. The support (as scale is inverted) of the channel is now at ……..levels and the down move is in matured stage. It is extremely rare to see a downfall to break the lower trendline of channel on downside itself as the entire move is associated with such loss of momentum and RSI has constantly shown positive divergences. So if we go by the very basic foundation of technical analysis that what has worked in the past will continue to work in future …….However, with passage of time the levels will keep increasing as the trendline is downward sloping.

Nifty hourly chart:As shown on hourly scale prices are currently moving higher in blue channel. As long as this channel is intact the short term trend will remain positive. As mentioned earlier only a close below ….. (shown in actual report)

Indian equity markets have arrived at crucial juncture. These are interesting times when emotional trading takes the front seat and the rational and logical reasoning becomes a passé. It is prudent to avoid a top here but at same time one has to be alert and keep monitoring price reaction near key reversal areas.

To know what is next from here on stocks and Nifty along with detailed Elliott wave counts and pattern analysis, Time cycles, sentiment indicators,etc subscribe now to “The Financial Waves short term update”. For subscription options visit the Pricing page on www.wavesstrategy.com and get instant access to daily research reports.

Nifty 49 daysTime cycles along with Elliott wave counts! Prices approaching crucial zone yet AGAIN!

The rise in Indian markets have been euphoric so far but, we are not buying into the theory of unprecedented gain and figures above 9500 ++ levels. The below article gives a brief overview on why it is time to stay alert and not complacent like majority. It eventually pays to not get carried away with the crowd but the emotional pressure can be enormous of not missing out the rally. However, markets are here to stay and so do wrong perceptions during major turning points. But it takes an objective technique with proven and time tested methods, belief, to stay alone when everyone is on another side.

We do not want to come in way of this euphoric rise but the Case in point is it is time to leverage less, book profits rather than start fresh investments when things look over-stretched. Various indicators have again started to align together which do not happen quite often.

Read the below research is picked up from daily report “The Financial Waves short term update”

Bottom Line: Nifty approaching close to 49 days Time cycle along with important channel line. Nevertheless, short term trend is positive with support of 8570!

Nifty daily chart:

Wave Analysis:

In previous update we mentioned that, “In short, move above 8570 will continue the upside trend. On downside 8450 is the immediate support. 5 days Exponential Moving average is also placed near 8450 level which acts as a proxy for short term trend!”

Nifty had another Gap up opening of nearly 25 points and sustained in green zone throughout the day. The buying pressure intensified post 1 pm and the index managed to touch life time highs near 8708 levels. This time the major gainers apart from banking stocks were Metal stocks like SSLT, Tatasteel,Hindalco along with Reliance Industries. These stocks have so far not participated in the up move and are finally showing some positive attempt. It will be crucial to observe if the underperforming sector can now contribute to upside index movement further from here. For now follow the trailing stop method and bar technique with stop of ……. Which is also the level above which there was channel breakout and pick up in momentum. So now this level is crucial and should act as good support.

49 days Time cycle: We have been applying this Time cycle for many months now and it has worked very well in indicating if the trend is near reversal or is in matured stage of up move. We can see that over past two times the top was formed not exactly on the cycle day but the momentum reduced after that and prices started showing distribution pattern. The cycle is again due on …. January and it will be crucial to observe if we see a top formation or few days of distribution with loss of momentum post …January.

Triangle pattern: Prices have continued to rally and touched new highs as required by running Triangle possibility. The problem with this pattern is in forecasting the last leg as it does not necessarily follow the Fibonacci relationships. Nevertheless, the projection zone which should act as strong resistance is near ……levels which also coincide with strong channel resistance shown by black trendline.

Unlike others, we will avoid getting extremely bullish for projections above 9500levels given the fact that we are approaching close to the channel resistance that has acted very well post Election results, 49 days Time cycle in near vicinity that resulted in sharp reversals in past andatleast loss of momentum over past two times, RSI has still not touched above 80 to void the daily negative divergences valid so far.

In short, continue to use reactive method with trend following system i.e. to stay positive unless we see close below ………..Also stay alert and not complacent like majority because many things are going to align together over next few days in similar way we previously highlighted in November 2014 post which there was a fall from 8627 to 7960 levels!

It is time to keep monitoring the price action on daily basis along with short term charts to understand the reversal areas and if the supports are protected or not. Subscribe NOW to the daily research report“The Financial Waves short term update”and get insights into the objective way of looking at markets rather than guessing with majority of crowd for 9500 ++ levels! For subscription options visit Pricing Page or contact us at helpdesk@wavesstrategy.com/ +91 22 28831358, +91 9920422202.

Nifty short term trend is positive but momentum will be the key!!!

Bottom Line: Nifty consolidated after the sharp rise of Thursday post the rate cut announcement. Move above 8530 – 8550 is important for short term uptrend to continue.

The below research is published today morning in "The Financial Waves short term update". For subscription options visit www.wavesstrategy.com 

Nifty daily chart:

Nifty 60 mins chart:

Wave Analysis:

In previous update we mentioned that “In short, move above 8530-8550 will continue upside trend towards 8630 levels where earlier high is placed. One should use strict risk management level of 8380 just in case if the rise turns out to be simply euphoric.”

Nifty closed the euphoric week with a net gain of nearly 230 points on weekly basis. The entire strong gain came on a single day i.e. 15^th January after the surprise rate cut announced by Mr. Rajan who has been known for surprises since September 2013 and this time it was no different. A strong Gap up move of nearly 140 points can result it catastrophe for short positions in futures. When trading in markets one should always keep leeway for events and should follow prudent money management strategies.

Now coming back to Nifty, the move on upside has kept the bias positive over short term. As long as the Gap created between 8300 and 8380 (low of Thursday) is unfilled the near term trend can continue on upside. However, decisive break of 8530 – 8550 is very crucial for positivity since this is the highs connected by previous two pivot highs shown on hourly scale.

As shown on daily chart, prices have managed to close above both 5 days and 20 days Exponential Moving average and the short term moving average (red) has moved above the 20 days EMA. This simple Moving average crossover system has worked very well even though it is delayed but gives good perspective on short term trend. So for reversal confirmation we have to see a decisive move below 8300 which will probably break both of these averages and will also fill the Big Gap created.

Warning signal: Even though the bar techniques are bullish one important parameter has reached near alarming levels - PCR ratio. This ratio has now reached towards 1.40 level. It has been many months since I have seen PCR ratio this high so many days prior to expiry. This does not indicate an immediate downside reversal but is associated with the risk element and suggests one to stay alert and leverage less on upside as sharp reversals cannot be ruled out.

From wave perspective, prices are currently moving in wave e of the expanding triangle pattern and close above 8530 – 8550 will open up possibilities towards new highs in this leg. As mentioned above use of risk management level near 8300 is very crucial in case of sudden reversal on downside.

In short, move above 8350 will continue near term positivity on Nifty over short term with 8380 – 8300 as important support area.

For subscription to daily research report "The Financial Waves short term update" that has Nifty along with 3 different stocks visit www.wavesstrategy.com or contact us at helpdesk@wavesstrategy.com / +91 22 28831358 / +91 9920422202

Nifty scenario analysis and path ahead!

Scenario analysis of Nifty applying Elliott wave theory!! 

6^th January 2015 was the day when Nifty lost more than 250 points in single day. Post making a low at 8065 levels prices have been moving higher and has touched the level of 8355 in today’s trading session. However will this rally make a new high? On the other side Crude continued to move lower and now trading below $50. Are we heading towards Energy crisis? So what will be market direction?

Elliott wave theory is one of the forecasting tools we have been applying to know the strength of trend and probable direction ahead. There are times where predictability reduces due to complex corrections. However as and when prices move further it provides important information for the upcoming trend. Below are the 2 charts of Nifty (60 mins time frame) where we have analyzed the 2 scenarios. This scenario analysis is taken from “The Financial Waves Short Term Update” which covers Nifty and 3 stocks where short term opportunity exists. 

Nifty 60 mins chart:

Nifty alernate scenario 2:

Nifty scenario analysis:

As per scenario 1 shown on first 60 mins chart, the low formed at 7960 on 17^th December 2014 completed minor wave (a) and post that minor wave (b) is ongoing. This wave (b) internally marked as (red) a-b-c is forming a regular Flat correction where wave b(red) of (b) retraced 76.4% level (exact) of wave a (red) and now wave c (red) of (b) is ongoing on upside. As per this count there is probability that ……………………….

As per scenario 2 shown on second 60 mins chart, prices are moving in contracting range. This is also one of the probable scenarios as even after the violent moves and one of the biggest fall of 250 points not seen in past 6 years prices have managed to protect the preceding pivot lows. This is a typical characteristic of triangle where prices move violently on one side but only to reverse back equally fast thereby resulting into no net progress but high volatility over short term. For this count to be valid the high of …………….

Advanced Elliott wave concepts suggest that during times of complex correction the probability to forecast the pattern reduces and as & when the pattern is near completion the predictability increases drastically. It is therefore important to wait for clear breakout …Meanwhile from trading perspective, one can continue to use daily bar technique. As per this method unless we see a close below ………………….

To know the detailed research on Nifty and 3 stocks subscribe to “The Financial Waves Short Term Update”and for more information visit www.wavesstrategy.com 

Dow Jones Industrial Average: Trading Flat correction Elliott wave pattern!!

US Equity market continued to move in high volatile environment. In this kind of situation one can get carried away at the highs or can create panic exactly at the lows. Hence application of objective tools is important to trade the markets. We have been applying Elliott wave theory along with basic technical analysis to capture the markets. Recently we were able to capture the down move from 18100 to 17265 levels. “The Global Waves Short Term Update” by Waves Strategy Advisors cover Dow Jones Industrial Average, EURUSD, Comex Gold and Comex Silver with applied Elliott wave counts and important turning points.

DJIA 60 mins chart: (Anticipated in the evening of 2^nd January, 2014)

DJIA 60 mins chart:

Wave Analysis:

For Dow Jones Industrial Average, in the last 2 trading session prices showed weakness and has been moving lower sharply. This suggests that rally started from 17050 level is complete at 18100 levels and correction on downside has started.

“Basic techniques like channeling continued to work very well on Dow Jones Industrial Average. We can see that since September 2013 prices are intact in upward moving channel as shown in black color. Recently prices found resistance at the same channel and has been moving lower. So from short term perspective, as long as high of 18100 is protected on upside trend is bearish now. Prices made a new high at 18100 however RSI was unable to make new highs which suggests negative divergence and has been losing strength on upside.”

On 60 min basis, the sharp fall in the previous trading session raises higher probability that may be wave b has completed and the next leg (wave c) has started on downside but we will have to wait for the move below 17780 levels in order to get confirmation of the same. Hence as long as prices sustain below previous peak trend will be negative and any pullback towards the same should be utilized as selling opportunities.

In short, for Dow Jones Industrial Average, near term trend will be negative with the important resistance of previous high (18100) levels. Move below 17780 levels will suggest down move to continue towards 17300 levels.

Happened: US Equity Market moved in line with our expectation and moved lower from 18000 to 17262 in 4 trading sessions. Post that prices have reversed on upside so what to expect now?  Will it break 18100 on upside?

The Global Waves Short Term Update gives detailed analysis on DJIA, EURUSD, Comex Gold and Comex Silver. Visit www.wavesstrategy.com for subscription to this Global research report.

Video: Elliott wave on Indian Markets and Nifty Path Ahead for the week

Video on Indian Markets and Nifty Path Ahead for the week using Elliott wave analysis. For update on Indian markets on daily basis subscribe equity research report sent directly to email id. For more details visit www.wavesstrategy.com

Nifty sharp selloff: Can this be just the beginning! Applying 2 stage confirmations for trend reversal!

Just few weeks back everyone was talking about how fall in Crude prices is good for India and help curb inflation.

However, we have been debating this thought process since the Crude entered its 3^rd wave on downside at $85. We have been constantly warning our readers and subscribers that the fall in Crude prices beyond a specific level that too within a short duration of time is not good for any economy. As this highlights the fragile nature of world manufacturing industry and inflation is just one parameter everyone is focusing on rather than paying attention to slowdown in global demand.

Now when world equity markets have started correcting people at large will then realize why sharp movements in one direction is not always beneficial even to Oil dependent country like India.

Today’s sharp selloff in Nifty simply produced a classical 2 stage negative confirmation as per Advanced Elliott wave – Neo wave. Below is a gist of today’s research report “The Financial Waves short term update” produced in morning.

Nifty 60 mins chart:

In today’s morning research report we mentioned the following:

Nifty opened positive and touched intraday high of 8445 levels during first half of the day. It came close to the 76.4% retracement level we have been mentioning since the upside move started after forming a low near 7960 levels.

Now the fall from 8627 to 7960 has taken 9 days against which the index has now consumed 12 days and retraced only near to 76.4% levels. This is keeping our existing wave counts shown on short term chart intact that the rise is only corrective in nature and the top at 8627 should remain protected. ….

The current ongoing pattern is very similar to that of the top formed in November 2010where we had a move down in 3 waves which was then retraced by nearly 76.4% rise in a clear 3 waves up move post which the downtrend resumed!

Nifty 60 mins chart shows the internal counts of ongoing correction and prices are currently in wave c of wave (b) which started from 8280 levels. The up move from 8280 to yesterday’s high of 8445 has taken two days and so a fall back below 8280 in next two days will confirm time reversal along with price as well. This will break 0-b trendline providing 1^st stage negative confirmation and will also retrace the complete up move of wave c thereby providing 2^nd stage negative confirmation.

In short, Nifty is moving at important juncture. Move below 8280 –8290 will resume the short term downtrend which should break previous ………. The momentum has failed to pickup after the strong Friday closing increasing the weightage of our current preferred scenario!

To know what is next from here for Indian markets and why fall in Crude prices is not helping Indian economy subscribe to “The Financial Waves short term update”along with Monthly research report to get trend analysis right from short term to long term forecasts. For subscription options visit www.wavesstrategy.com or contact us at +91 22 28831358 / +91 9920422202. Write us at helpdesk@wavesstrategy.com

Nifty continue to move in corrective fashion. A strong breakout awaited!

Bottom Line: Nifty finally gave a positive breakout after extended period of consolidation and formed higher highs and higher lows

The below research was published today morning in "The Financial Waves short term update". For subscription options visit www.wavesstrategy.com 

Nifty daily chart:

       Nifty 60 mins chart:

Elliott Wave Analysis:

In previous update we mentioned that, “In short, close above 8300 will suggest start of upside trend towards 8460 levels whereas move below 8220 followed by 8150 level will suggest weakness to continue in form of wave b.”

Nifty finally managed to give a positive break above the 8300 levels and the Bollinger Band resistance thereby confirming the start of wave c on upside. As mentioned earlier this breakout is in sync with the wave counts we have been expecting to unfold. Also each of the waves has started with sharp up move thereby creating enough euphoria. It will be therefore crucial to observe if the rally extends beyond 3 to4 days and can manage to cross above 8460 – 8470 levels which is 76.4% retracement level of the entire down move from 8627 to 7960.

As per preferred scenario, close above 8300 confirms start of wave c of (b) on upside. The short term upward moving channel is shown on 60 mins chart. Trend will remain positive as long as this channel remains intact. Move back below 8290 followed by 8220 will be bearish sign. But for now as long as these levels are intact bias remains positive.

On the daily chart, we are showing an alternate possibility of Expanding triangle after the x wave. The reason for considering this as alternative scenario is based on the fact that prices have not been respecting the important trendline supports or resistances and has been showing trending moves but within a range. This is usually associated with triangle pattern. So if Nifty manages to cross above 8460 – 8470 levels then we will adopt this possible wave counts.

As per Advanced Elliott wave concepts as well, during complex correction forecasting pattern is difficult till the wave counts are near completion. It is therefore prudent to use other techniques of channels and bias to stay objective.

In short, the trend for Nifty is now positive for a move towards 8460 levels. If momentum continues to build beyond that then we will adopt the alternate possibility of expanding triangle in wave z which can result into touching new highs above 8627. Use 8290 followed by 8220 as very crucial risk management level.

For subscription to Equity research report with detailed explanation on Nifty using Technical analysis and Elliott wave visit www.wavesstrategy.com